On 6/11/12 08:38 AM, Changaco wrote:
On Mon, 05 Nov 2012 09:46:40 +1100 ianG wrote:
These sound rather like political statements, not economic statements.
How money works is a political matter. If one can get a bigger
share of monetary creation than other people, one gets power.
It's also an "economic" matter, because badly designed systems cause
crises.
It's fine to have these opinions such as X is fair and Y is unfair, but
it's not a particularly good basis for building a money system.
People eventually figure out when a system isn't fair, and it falls,
because money is nothing without a community to use it. So yes, being
fair is an important quality for the long term.
Well, I'm not disagreeing totally - just pointing out that if you are
going to design a money system, then you'll need a better definition of
what "fair" means than that which is bandied around in the popular media.
E.g., think of the price of a beer. At the supermarket, it might be $1
for a can or bottle. But at the pub, it might be $4. And if you make
it yourself, it might be $0.1 or less.
Is that fair? Well, no, it is not fair -- if and only if you can
convince some politicians of the unfairness. If you can get them to
impose price controls on those evil pubs, then you've defined (un)fair,
albeit in circular logic. The basis for price controls is typically
just that - the operations of the market is "unfair" and the market
operators are gouging/speculating/hoarding/ ... insert favourite terms
... and someone else must do something about it.
The market solves "fair" by giving people a choice. Either they buy at
the market-clearing price where supply crosses demand, or they go
elsewhere. In such a definition, "fair" doesn't really capture anything
of use. Get back to first principles.
In the alternate, "fair" is a perception, so really we are talking about
marketing/politics/trickery of some form.
Sure it can! Don't get swayed by central bankers who prefer inflation
over deflation, and scare the bejeezus out of the population with
stories of economic collapse in order to keep their little money machine
ticking over.
Sure, anybody who doesn't agree with you has to be influenced by the
evil central bankers, right ?
Evil and unfair, right! Sadly, the central bankers have their hands
full at the moment, and can't take time off to explain their side of the
story ;)
Taking sides is optional. History is less optional. And when building
money systems, perceptions and assumptions and received wisdom will kill
you.
Whenever we build a new money system, typically we have to seed the base
in some sense or other - what you might refer to as unfair.
E.g, The temporal asymmetry for Bitcoin certainly worked in its favour.
IOW, because it was to be worth more in the future, early people did
invest in it, on that risky expectation. And got rewarded. Which
created the virtuous circle of bringing new investors/money users in.
I wonder if there is a 'law' here? Someone or some many have to make
out like bandits to bootstrap a new money?
So, if it isn't an effect of appreciation, making early holders the
winners, what is it?
As the name suggests, temporal symmetry is about the long term. Of
course asymmetry gives a short term boost, the first users are getting
money almost for free and can use it later to gain wealth.
Drawing from finance theory, they are only getting "money for free" if
we ignore risk. Those who invest in a risky product get a bigger
reward, typically calculated as the inverse of the risk. This is simple
to see: if you have 10 risky products that each have a 90% chance of
failure, then the reward for investing should be at least 10:1. If you
invest in all 10, and 9 fail, the 10th has to return your entire
investment, to break even.
In addition, Bitcoin benefits from the fact that making a symmetrical
currency is much harder and therefore hasn't been done yet. Spatial
symmetry requires a Web of Trust while anyone can start using Bitcoin
immediately.
These notions -- asymmetry along spatial and temporal lines -- come then
from very good and understandable causes. They are not bad per se,
although they may point to inefficiencies that can be solved by
technological, social or regulatory advances. In that sense, they can
be seen as opportunities for new monies to enter the market. Good,
because they are bad for others, perhaps.
iang
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